Link

By Scott Moritz
Senior Writer
9/5/2006 1:06 PM EDT



Apple's long-awaited cell phone is ready for production, says a Wall Street analyst.

Though there's no confirmation from Apple and no leaked photos of the official prototype, American Technology Research analyst Albert Lin released a report Tuesday saying, "The kinks have been worked out of the new phone and that it is set for production."

Lin, a wireless technology analyst who has been tracking the Apple phone developments, says the device will be a "smartphone." Typically these are converged devices with operating systems that manage features like music collections, call lists, Web access and cameras.

The design, says Lin, will be an "iPod nano-like candy bar form factor and come in three colors."

"We believe this smart phone has been in development for over 12 months and has overcome substantial challenges including design, interference, battery life, and other technical glitches. As we have seen in the smart phone space, it is very difficult to produce a converged product of high quality," Lin writes.

Speculation had been brewing for the past two years that the iPod maker was working on a music phone. Earlier this year, Morgan Stanley analysts said two Taiwanese contract manufacturers were vying for the job to assemble the so-called iPhone.

Investors and industry observers have been watching these developments closely to see if Apple can repeat the runaway success it has had with the iPod digital music player. The sky-high expectations are built on the assumption that Apple can exert its design power and craft a hugely compelling phone.

Consumers have proven to be responsive to new phone fashions. No. 2 phone maker Motorola , for example, revitalized its business largely through the worldwide popularity of its sleek Razr phone. Handset leader Nokia continues to sell the most cell phones, but has failed to create an iconic design of late.

Lin expects Apple will start selling the phone early next year and he has raised his price target for Apple to $91 from $75, on the assumption that the iPhone will be a hit.

If the phone fetches $200 apiece and manages to capture about 1% of the market, or sell 10 million phones, Lin sees the iPhone contributing $2 billion in annual revenue to Apple.

Well, since no one else is commenting, I will
I think it's a bit much...your phone is supposed to be a phone, not 5,000 things rolled into one. Sure, it's less stuff to carry around, but then your expectations go wwaaayyyy up for a phone...so if the next phone that you end up with isn't as good a phone, you complain and say it stinks. I say let each thing stay seperate.
When I was looking at various phone ratings on the web, a lot of the phones were given bad ratings simply because they weren't as ''cool'' as the 'x' phone, and therefore people didn't like it.

Article from Dvorak

Anyone know if the iPhone is going to be released on time?

Don't know but there are rumors that the phone only has 40 minutes of talk time:
http://techreport.com/onearticle.x/12199

I love Dvorak but take what he says with a grain of salt. They could aways improve the battery.

Dvorak is a known Apple basher and his credibility in general is shaky at best. The source for the fourty minutes of talk time is from the enquirer, not exactly the most reputable publication.
The iphone is still on schedule for a June release.

Dvorak hates almost every big company, you should see how he bashes Microsoft. I still remember reading a convincing article of his in a 2004 PC Mag article how Linux is going to force Microsoft to drop the price on their OS to $25 by 2007 (you could imagine how that gave me heart palpitations)

You think the iPhone is going to release on time? If I sell May contracts and the phone is delayed I'm up the creek.

You would be up the creek, true. The reason why the phone wasnt launched any earlier was because the FCC still had to approve the device, there werent that many bugs that still needed to be ironed out. I dont see Apple delaying two products especially since they officially delayed one to get the other out on time.
ETA: Foxconn was recently raided and around two dozen people were arrested, this may or may not affect the iphone launch. They were arrested on suspicion of insider trading and stock manipulation.

How would an OEM manufacture be guilty of insider trading? Unless they are trading based on the timing of releases to which they have some insider knowledge.

Sorry, its not foxconn its inventec, the ipod manufacturer. No problems with the iphone.

Interesting iPhone related article

I think the ticker is BAD.F & I'm trying to figure out if BALOF.PK is also their ticker.

Does anyone else here think that the fact that one can't feel the digits (because it's a screen, not buttons) will hinder dialing (w/o looking)?

Yes, to add to that most people that buy phones this expensive need e-mail capability and that is really going to be tough, rapid firing e-mails with the iPhone. It's the main reason why I think Jobs expectations of 1% market share is very ambitious.

So you think the stock will be affected?
Also, I don't think most people expect email; I think most people who get it will be "spoiled" people who just want it because it's the iPhone, and/or it's popular

Of course, I expect the stock to rise on i{hone hype around the time of the release. They may report string first quarter sales because of all the die-hards that rush out to buy the phone. After that when Apple reports less sales the stock will tank.

pump and dump then?

Yep, I see 100 and then 80, maybe even 110 and 70

Obviously I disagree. First of all the iphone will have no material impact untill the fiscal 4th quarter. Results of this quarter will immediately precede the much anticipated launch of Leopard and all its secret features. From Hype to Hype. Additionally you are assuming the iphone is a business phone for busy people needing email on the go etc, I tend to think that the iphone is being marketed toward Apples installed base of existing ipod users or people looking to buy one in the near future. Definitely not the business crowd. Then theres talk of a revamped ipod line coming in the 2nd half of '07...

test

The apple OS releases don't create as much buzz as they used to.

It's quite a leap to say that 1 out of 100 cell phone users will plunk down that type of cash ($499 & $599) for a phone that most of them were getting for free. A lot of people are going to buy the iPhone, just not as many as apple thinks. The reason I keep going back to business people is because right now those are the only people willing to spend $300+ on a phone.

Ipod growth is slowing as most people that will buy an MP3 player in their lifetime already have one and their market share doesn't have too much room to grow. PC growth has been decent but not enough to justify the current stock price. I like Apple, I just think the stock is overpriced.

Only business people are willing to pay that much for a phone, everyone else would pay that much for a phone/mp3/internet, especially considering each of those categories come with very cool and practical features. The target audience is not businessmen.
The iphone might come with a rebate and Apple is already working on a low-end version which should follow not too long after its higher priced sibling. Not too mention the fact that AT&T may pony up some cash per subscriber added with the iphone. (Which makes sense why you wont be able to buy one without a contract, should that itself be true.)
ipod growth may slow somewhat, but not as soon as you think. Take a look at last quarter for example. Even though granted it was the holiday results I dont think any analyst even came close to predicting how many units Apple would ship.
Forget about the OS buzz, the profit margin on leopard is going to be near 85% and will be a major contributor to the bottom line.

So just pump and wait and see you're saying?

It seems to me that Apple tried to make the 1st Generation iphone the "jack of all trades, master of none."

It's running the slower 2G(EDGE) data speeds, it's exclusive to ATT for 5 years, it has a small amount of memory for a device claiming to be a "widescreen ipod," it has no keyboard-I've yet to a phone to date succeed without a hard keypad, and the thing claims to be a "revolutionary phone," but it doesnt even have a removable battery!!!

The 8GB version will cost more more than a 30GB ipod and top of the line smartphone combined.

No business customer is buying this thing without proven business applications built for it-of which there are none.

IMHO the only market for this phone are the early adopters(and stupid ones at that!) and therefore there's no way the 1st generation iPhone will come close to 1% market share until the price comes below $300 with a 2-year contract.

But all the $300+ phones on the market today have phone/mp3/internet. I have all three on my T-mobile Dash that I got for $99 (I think it's $150 now) and it has a full keyboard. Even if the price comes down $100 it's still very expensive for a phone that you can't use for heavy e-mailing.

Every great growth company has a peak, the peak is looming.

yes, but on the other phones the mp3 is a feature as opposed to a distinct function. I suggest you guys watch the presentation again, a lot of the details get overlooked as time goes by.
Seems that most analysts think the iphone should do at least 1% probably more. I know it doesnt mean anything, but at least im not the only one who thinks so.

and that's worth $500? I know the iPhone will end up being a wicked cool phone, it's just too expensive to attract a 1% market share.

What happened Ctown? Had a change of heart? lol. The Edge network is in the process of being upgraded as far as I know to better keep up with 3g speeds.(Saw it on engadget a while back). The exclusivity agreement with ATT isnt a big deal considering Apple will get more bang for their buck using them and Apple will be releasing lower end models which are not part of this agreement.
A rebate is still not out of the question.

The top of the line smartphone isnt an Apple.

Again, it isnt marketed towards business people.

Lol, not a change of heart since seeing the announcement, just a good reading of the fine print!

Anyway from what I understood about the EDGE upgrade is that it wont happen until 2009 and that it won't be backwards compatible with current headsets, so no go on getting any decent cellular data speeds on the 1G iphone.

The biggest turnoff for me(besides for being att exclusive-although it will be interesting to see if future lower end iphones will come out in CDMA) is the internal battery.

I mean it's bad enough that the ipod has an internal battery, but at least the battery life on an ipod in 20+ hours. There's no way that the iphone will come anywhere near that number-I'd be surprised if actual talk time cracks 5 hours.(that 40 minute figure is pure BS)

Palm/Handspring learned the hard way that the mass market weren't going to buy treos if it didn't have a removable battery. Who's going to spend so much money on a phone only to have it stop holding a charge after a year because of excessive rechargings?

Apple advertises 5 hours of talk time/internet browsing/video. I believe (andcorrect me if im wrong) that this is considered average for smartphones and even puts some regular phones to shame (A900 cough cough). 5 hours of internet browsing on a full internet isnt shabby at all, especially considering you will be able to order stuff online and the like...
Apple also advertises up to 16 hours of audio playback. Shorter than the Nanos, but not terrible.
I also think, (and correct me if im wrong again) that if your battery dies Apple doesnt make you buy a new ipod, rather they will replace your ipod for a fee. ($60)
All in all I dont think its the end of the world.

A better bet (and safer) might be to buy a couple straddles.

Appleinsider.com

Apple seriously considering iPhone rebate, subsidy - report

By Katie Marsal

Published: 10:00 AM EST
Several recent developments on Apple's iPhone strategy have compelled one analyst to raise his estimates and price target on shares of the company, such as word that the iPod maker is seriously considering a move to subsidize the cost of the handset through rebates or other means.

Rebates or subsidies

In an in-depth research note released to clients on Tuesday, American Technology analyst Shaw Wu cited sources who indicate that a mail-in rebate or carrier subsidy for iPhone of $50-150 is under serious consideration by the Cupertino-based electronics firm.

"We are hearing rebates of $50-150 that will be offered by AT&T to lower the price points for iPhone (currently $499 for 4 GB and $599 for 8 GB) and to entice customers to sign longer term voice and data contracts," the analyst wrote. "From AT&T's perspective, a rebate is a great marketing tool and small sacrifice to make to entice a customer to sign up for 2-year voice and data cell phone plans that cost about $75-100 per month (before taxes and fees), meaning $1800-2400 in 'guaranteed' bi-annual revenue."

Revenue share and bounties

Wu also told clients that he believes Apple will be paid a "bounty" for each AT&T customer it signs up through its retail and online stores. "In addition, Apple will likely participate in a revenue sharing agreement where part of the monthly fee charged to customers will go to Apple ," he explained. "Besides the hardware, Apple 's value added for the iPhone to AT&T is its marketing, customer service, and unique software and features, including visual voicemail and the most complete PC experience on a cell phone."

Recurring revenue streams from carriers

In addition, the AmTech analyst estimates Apple to garner "mid to high single digit incremental high margin revenue per user" from its carrier partner, which could potentially surge as high as "low double digits" depending on future iPhone features.

"We view this incremental revenue from the carriers for Apple 's value-added as positive in that it will likely be very high margin, in the 80 percent range, similar to royalty and/or intellectual property (IP) revenue where there is little incremental cost," he wrote. "We believe this recurring revenue stream is high quality and adds an additional degree of stability and predictability to Apple 's financial results."

Adding Apple to AmTech's Focus List

As a result of his findings, Wu has placed Apple on AmTech's "Focus List" while also raising his estimates and price target on consumer electronics firm.

For fiscal 2008, the analyst now estimates Apple to generate sales of $31.1 billion and per-share earnings of $4.15, up from $28.8 billion and $3.75. His model assumes sales of 3.45 million iPhone units during the fiscal year, up from a previously conservative view of 790,000 units. Still, he said, estimates could turn out conservative depending on Apple 's ability to introduce lower cost cell phones which he believes could significantly raise unit assumptions.

"We continue to view Apple as among the strongest fundamental stories with its four-pronged vertically integrated end-to-end portfolio (Mac, iPod + iTunes, Apple TV, and iPhone) and see several catalysts in the quarters ahead, including Mac OS X Leopard, new Macs, new iPods, new movie and carrier partners, and lower cost cell phones," the analyst reiterated in his note to clients.

Wu also raised his price target on shares of Apple to $145 from $118./End


Granted that Shaw Wu has shown that he is as much of an Apple speculator as the guys over at Macrumors.com, it's still something to think about. Taking a look at the price action for Apple today investors appear to be shrugging off Mr. Wus comments. Also his figures and sales projections appear to be overly bullish. Also whats his valuation method for a price target of $145? Seems a bit exagerated.

They tried this concept (cheap phone/expensive plan) with the Motorola Q and it flopped.

It's no iPhone but look what you get and look at the price....

$149 after rebate

Come on. Did you see the "extended battery" that comes with it? The display is tiny. It isnt a smartphone. And the talk time is only 150 minutes! Have fun using that big box to extend your talk time.

I know it's no iPhone, but it's also a slick mp3 phone for just $150.

Correction:
slick phone that can play mp3s

And you wouldnt pay $250 more for a phone ten times better? A lot of people would.

A lot of people won't spend $150 on this phone let alone cough up another $250.


No, it's an MP3 phone.

about that other phone (the upstage) -- http://www.phonescoop.com/phones/phone.php?p=1112

Only until the iPhone comes out and redefines the term.

Watch out for the gPhone

Launch window: June 15 - July 15

Friend of mine renewed his contract with Cingular and they gave him a $300 credit toward the purchase of a new phone. He asked them if he could use it to buy the iphone when it came out, they said yes. So even if there are no official rebates, there will be loopholes.